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Top oil exporters to the U.S.

Data: U.S. Energy Information Administration; Chart: Kavya Beheraj/Axios

Lawmakers from both parties are pushing the White House to impose a ban on U.S. imports of oil and petroleum products from Russia, even as buyers are already steering clear of the country's crude.

Driving the news: Appeals or proposed bills are coming from lawmakers including Senate Energy Chairman Joe Manchin; a number of GOP lawmakers, and liberal Democratic Sen. Ed Markey.

Why it matters: Total U.S. oil and refined product imports have declined greatly since the mid-2000s as the shale boom began a surge in domestic production.

The U.S. remains, however, a significant importer, and Russia is among the largest suppliers.

Yes, but: Russian oil exports are taking a major hit even without new government limits, Reuters and others report as buyers "self-sanction."

"U.S. traders in the nation’s largest oil hubs have cautiously put imports from Russian companies on hold, even though the White House has said oil sales are not the target of sanctions," it reports.

It's not just the U.S., either. "Demand for Russian oil has collapsed as refineries, banks and shipowners shunned the country’s vast commodities market," the Financial Times reports.

Charting Russia's U.S. oil sales

Lawmakers from both parties are pushing Biden to impose a ban on imports of oil and petroleum products from Russia.

A chat showing top oil exporters to U.S. 

Oil companies

Ominous forecasts about the impact of climate change serve as the backdrop for the world — led by U.S. lawmakers and companies — to debate big action on the problem, which could upend energy systems and our way of life.

Energy & Environment

ExxonMobil pledged Tuesday to end its role in a major Russian oil-and-gas project and cease new investments in the country due to its invasion of Ukraine.

Why it matters: ExxonMobil is among the world's most powerful oil companies and has longstanding investments and operations in Russia.

The move, which follows divestment announcements by Shell and BP, signals how Western oil majors are cutting ties with Russia despite its massive hydrocarbon reserves.

Driving the news: Exxon has a 30% stake in the big Sakhalin oil-and-gas project in Russia's far east and operates the development. It's Exxon's only current project in Russia, a spokesperson said.

The other partners in the venture are Russian state-controlled oil giant Rosneft as well as Indian and Japanese companies.

ExxonMobil said it's "beginning the process to discontinue operations and developing steps to exit the Sakhalin-1 venture."

The company also said that "given the current situation, ExxonMobil will not invest in new developments in Russia."

What they're saying: "ExxonMobil supports the people of Ukraine as they seek to defend their freedom and determine their own future as a nation. We deplore Russia’s military action that violates the territorial integrity of Ukraine and endangers its people," the company said.

Exxon to end operations in Russia, vows no new investments

Exxon has longstanding investments and operations in Russia.

Photo Illustration: Budrul Chukrut via Getty Images

Russian invasion of Ukraine

Shell ends partnerships with Russia’s Gazprom after Ukraine invasion

Two major oil companies have now divested from Russian energy companies following the attack.

Russian President Vladimir Putin during the meeting with Shell CEO Ben van Beurden in Saint Petersburg, Russia, in 2016.

Russian President Vladimir Putin during the meeting with Shell CEO Ben van Beurden in St. Petersburg, Russia, in 2016. Photo: Mikhail Svetlov/Getty Images

Royal Dutch Shell

Russia

China is becoming the most formidable rival America has faced, and the risk of confrontation with Russia, North Korea or Iran still looms. Authoritarians are rising, the chaotic Afghanistan exit revealed the limits of U.S. power, and the pandemic, climate change and other critical challenges continue to pose grave threats.

World

There are fresh signals that the invasion of Ukraine could seismically reshape the West’s energy relationship with Russia.

Driving the news: Germany, a huge buyer of Russian gas, on Sunday announced new steps to buffer itself from Vladimir Putin.

They include building new liquefied natural gas import terminals, expanded gas storage, and perhaps, reversing plans to close nuclear plants.

Also Sunday, U.K. Foreign Secretary Liz Truss floated the idea of G7 limits on Russian oil and gas imports.

The big picture: It's part of wider European efforts to boost reserves and clean power that are taking on new urgency in light of Russia's war.

The European Commission, per several reports, is slated to soon propose larger gas storage requirements.

Reuters reports that a draft plan also aims to speed renewables deployment as a way to fight climate change and boost energy security.

Reality check: Major new Western sanctions have thus far avoided taking direct aim at Russia's oil and gas exports.

Driving the news, part 2: BP, citing Russia's attack, pledged yesterday to divest its 19.75% stake in Russian state-controlled oil giant Rosneft.

And last night, Norway-based oil-and-gas giant Equinor said it's exiting its joint ventures in Russia and halting new investments there.

What we're watching: Anna Mikulska, an expert in Russian energy markets and geopolitics, said the BP move likely heralds a wider trend.

"[The] Russian state is now viewed as a malign actor and, hence, dealing with Russian state-owned companies will be viewed in a negative light, could become scrutinized and will definitely bring public discontent," she said via email.

Mikulska, a fellow with Rice University's Baker Institute for Public Policy, said she's watching, for example, to see whether Exxon and Shell also back away from their work in Russia.

The intrigue: The Russian invasion is causing ripples in U.S. lobbying and energy debates.

Oil-and-gas industry groups are jointly urging President Biden to bolster policy support for U.S. LNG exports and back off leasing restrictions, among other moves.

Putin's war may herald a new energy era

Recent days suggest the West's energy relationship with Russia could undergo a major shift.

British oil company BP said Sunday it will exit from its 19.75% stake in Rosneft, the Russian oil giant with ties to the Kremlin, and that BP CEO Bernard Looney will immediately resign from Rosneft's board.

Driving the news: The British government had called for the move Friday, when it summoned Looney to a meeting with U.K. business secretary Kwasi Kwarteng and accused Rosneft of providing fuel to Russian President Vladimir Putin’s army for the invasion, according to multiple reports. 

Why it matters: BP's step and the news about Germany’s gas posture Sunday together show how the crisis is beginning to show signs that it could seismically reshape the West’s energy relationship with Russia, writes Axios' Ben Geman.

What they're saying: “Like so many, I have been deeply shocked and saddened by the situation unfolding in Ukraine and my heart goes out to everyone affected. It has caused us to fundamentally rethink bp’s position with Rosneft," Looney wrote in a statement.

"I am convinced that the decisions we have taken as a board are not only the right thing to do, but are also in the long-term interests of bp. Our immediate priority is caring for our great people in the region and we will do our utmost to support them. We are also looking at how bp can support the wider humanitarian effort.”

“Russia’s attack on Ukraine is an act of aggression which is having tragic consequences across the region. bp has operated in Russia for over 30 years, working with brilliant Russian colleagues. However, this military action represents a fundamental change. It has led the bp board to conclude, after a thorough process, that our involvement with Rosneft, a state-owned enterprise, simply cannot continue. 

We can no longer support bp representatives holding a role on the Rosneft board. The Rosneft holding is no longer aligned with bp’s business and strategy and it is now the board’s decision to exit bp’s shareholding in Rosneft. The bp board believes these decisions are in the best long-term interests of all our shareholders.” 

Update: It remains unclear how BP plans to exit its Roseneft position. Options could include selling its shares on the open market, selling them to specific buyers via private placements or possibly surrendering the shares to Roseneft itself.

A BP spokesperson tells Axios: "We have taken the decision to exit and have announced it. We can’t yet say how we deliver this."

BP will divest stake in Russian oil giant Rosneft

BP CEO Bernard Looney will immediately resign from Rosneft's board.

New U.S. sanctions don't take aim at Russia's massive petro-exports, reflecting delicate White House efforts to squeeze Vladimir Putin without spurring even greater global energy price spikes. 

Why it matters: Oil and natural gas exports are critical to Russia's finances. But the invasion of Ukraine comes as markets are already tight, and the assault sent oil prices above $100 per barrel and sharply increased natural gas prices in Europe too. 

The big picture: "Biden is definitely in a tricky spot when it comes to crafting sanctions that will hurt Russia but not the American people," oil analyst Ellen Wald told Axios.

Wald, a senior fellow with the Atlantic Council, said via email that directly hitting Russian energy "would cause dislocation throughout the global oil and gas marketplace." 

"The West has so far refrained from curtailing Russia's ability to market energy supplies...highlighting elevated concern about a price shock amid an extremely tight inventory situation and limited spare capacity," Barclays analyst Amarpreet Singh said in a note.

U.S. gasoline prices are at their highest levels since 2014 and slated to climb further. They currently average $3.57-per-gallon, per AAA. 

Catch up fast: The White House on Thursday announced sweeping new sanctions in coordination with the G7.

They include new export controls and moving to cut off Russia's largest banks from Western financial systems.

President Biden, in a White House address, also said the U.S. is working with other countries to evaluate additional releases from strategic oil stockpiles.

Zoom in: The sanctions address Russia's oil-and-gas sector to a limited degree via steps like restrictions on U.S. investors providing debt and equity to key Russian companies like Gazprom.

But U.S. officials emphasized that they're not looking to crimp energy exports from Russia — Europe's largest gas and oil supplier — for now.

"Our sanctions are not designed to cause any disruption to the current flow of energy from Russia to the world," deputy national security adviser Daleep Singh said at a White House press briefing Thursday.

He acknowledged Russian energy's "systemic importance in the global economy."

Where it stands: Both Brent crude and U.S. prices fell back significantly Thursday afternoon after surging when the invasion began, though still remain at their highest levels by far since 2014.

"A good deal of its recent rise was caused by uncertainty over whether Western leaders would impose sanctions on Russian oil and gas directly," Wald said, noting the price retreat yesterday stemmed from the White House signaling that would not happen for now.

She added, however, that oil prices are still "higher than fundamentals indicate given the ongoing conflict and risk premium."

What they're saying: "I think what the Administration is trying to do is to sharpen all of the pain on the Russians. Denial of access to tech and finance is going to have a massively disproportionate effect on the Russians," said Richard Nephew, a sanctions expert with Columbia University's Center on Global Energy Policy, via email.

"There is some risk of blowback, but it is much less than if we went over to top with our sanctions," added Nephew, who was previously the deputy special envoy for Iran in the Biden administration and a senior Obama-era sanctions official.

"The issue is how we can help make the occupation as painful as possible so Russia withdraws. That's where these sanctions will come in," he said.

Yes, but: The efficacy of the effort remains unclear for now. 

As Axios' Emily Peck reported, Russia's been living with and maneuvering around sanctions for nearly a decade and has $630 billion in cash reserves to cushion the impact of the sweeping new restrictions.

What we're watching: The shape of additional sanctions that could follow. "Sanctions work better if you keep piling them on, day by day.  Every day needs to be a bad one in Moscow," Nephew said.

Biden's challenge: Hitting Putin while limiting energy pain

New U.S. sanctions don't take direct aim at Russia's oil and natural gas exports

Photo Illustration: Shoshana Gordon/Axios. Photos: Alexei Druzhinin (TASS), Alex Wong/Getty Images

Oil prices jumped above $100 per barrel for the first time since 2014 and European gas prices surged after Russia invaded Ukraine, an assault with far-reaching consequences for energy markets and geopolitics.

Driving the news: The global benchmark Brent crude is up by around $8, trading at roughly $105 per barrel, while U.S. futures are also up similarly sharply at over $99 per barrel.

Already high natural gas prices in Europe, which relies on Russia for about 40% of its gas imports, soared, too, with futures climbing around 40% on the Dutch TTF exchange.

Why it matters: Beyond the tragic human toll of the Russian invasion, higher energy prices — especially amid wider inflation — will touch everything from the cost of goods as industries pay more for commodities to U.S. drivers' wallets as pump prices climb.

What we're watching: Here are a few things on our radar as the crisis unfolds ...

1. Physical supplies. The assault brings the potential for supply disruptions. Roughly a quarter of Russian gas shipments to Europe move through Ukraine, and these pipelines are vulnerable to bombing or sabotage. Russia is also Europe's largest oil supplier, though overall crude transit through Ukraine is more limited.

2. The sanctions response. President Biden said he plans to meet with G7 leaders today and vowed "our allies and partners will be imposing severe sanctions on Russia." A special meeting of E.U. leaders in Brussels is working to coordinate their response as well, vowing "massive, targeted sanctions."

U.S. and European sanctions thus far have not targeted Russia's energy sector, though they can have indirect effects.

3. Domestic politics. High gasoline prices are a political problem for Biden and Democrats ahead of the midterms. Biden has said he'll seek ways to address consumer costs, but his options are limited. One thing to watch: the potential for more releases from the Strategic Petroleum Reserve.

4. Energy transition. Europe's reliance on Russian fossil fuels could accelerate its decarbonization efforts, something European Commission President Ursula von der Leyen called for earlier this week.

But, more broadly, it joins COVID-19 as a factor that will sap attention from global climate efforts.

The crisis is also underscoring the ability of the U.S. to use liquefied natural gas exports as a geo-strategic tool. And as Axios' Hans Nichols points out, administration officials have recently called on U.S. producers to expand output.

The surging oil prices could also put new pressure on the Biden administration to loosen its posture on domestic oil-and-gas lease sales.

5. Russian response: Russia has a formidable cyberwarfare capability. It could be difficult to contain its cyberattacks, including those against energy infrastructure, to Ukraine. Deliberate moves against the West are possible.

A key senator warned Axios' Jonathan Swan and Zach Basu of this on Wednesday.

Analysts are trying to wrap their heads around the crisis.

S&P Global Platts reports that "oil markets are understandably on edge due to Russia's outsized market position and 2.7 million barrels per day of crude exports to Europe."

But their analytics unit does not expect sanctions that will significantly curtail supplies, or that Russia will hold back large volumes, the story adds.

Nonetheless, tight global markets amid the increased demand coming out of the pandemic mean upward pressure on prices as traders weigh the risks from the military invasion.

"Russia is the third largest oil producer, and second largest oil exporter. Given low inventories and dwindling spare capacity, the oil market cannot afford large supply disruptions," UBS analyst Giovanni Staunovo said via Reuters.

The intrigue: The Russian aggression is putting more focus on the possibility that nuclear talks with Iran could revive a deal that brings more Iranian barrels back onto global markets — some of them soon, given that Iran has some crude waiting on tankers.

“The only real option that the Biden administration has to increase oil supply in the near term is signing an Iran deal and then convincing Saudi Arabia to produce more," Rapidan Energy Group president Robert McNally told Axios' Hans Nichols.

Go deeper: Ukraine-Russia crisis latest developments

Russia's war shakes energy markets

Higher energy prices will touch everything from the cost of goods to U.S. drivers' wallets as pump prices climb.

A protest in front of the Brandenburg Gate in Berlin on Thursday. Photo: John Macdougall/AFP via Getty Images

Energy

The Russian government's moves to redraw the map of Ukraine, while threatening to conduct a wider and more devastating invasion, is already impacting turbulent energy markets.

Why it matters: The clearest way Americans will feel the price of the conflict may be in the form of energy costs, especially the price of gas at the pump. 

The big picture: Russia is one of the world's top oil and gas suppliers, and Europe relies on the country for about 40% of its natural gas supplies. 

As expected, natural gas prices in Europe climbed Tuesday as a result of the ominous developments. 

In particular, Germany's decision to halt the certification process for the Nord Stream 2 pipeline, which would carry Russian gas directly to Germany, is a potential paradigm shift in Europe's energy politics. 

Depending on their severity and targets, European Union and U.S. sanctions could prompt Russia to curtail oil and gas exports to the West, forcing prices to rise and punishing NATO economies. 

U.S. officials warn this will only hasten Europe's energy diversification. 

Threat level: President Biden has been trying to prepare Americans for the possibility of added energy costs as a result of allied country Russian sanctions. "Defending freedom will have costs for us as well, here at home. We need to be honest about that," Biden said yesterday. 

The administration has been working to secure alternate sources of natural gas for Europe should Russia shut off exports, as well as pursue measures to keep U.S. gas prices in check. 

But that will be tough with tight global supplies. 

Biden pledged to take steps to blunt price increases, saying, "I want to limit the pain the American people are feeling at the gas pump," he said. "This is critical to me."

Of note: One option the White House may choose would be tapping the Strategic Petroleum Reserve again, but this has limited effectiveness.

Yes, but: The U.S. has not revealed specific commitments, other than general language about working with other energy suppliers, including large LNG exporters such as Qatar.

Between the lines: Russia appears poised to conduct a major invasion. This would trigger additional and far harsher sanctions. 

These sanctions could have unintended consequences for the energy sector, which the White House aims to avoid. 

ClearView Energy Partners cautioned yesterday that Russia's "connectedness to global markets" as well as oligarchs' ownership in energy companies may make repercussions difficult to completely avoid. 

Go deeper: Russia-Ukraine crisis opens new era of petro politics

How the Russia-Ukraine crisis will affect U.S. energy prices

The clearest way Americans will feel the price of the conflict may be at the gas pump.

Illustration of a rocket going into oil. 

Oil majors are talking the talk on climate change far more than they're walking the walk, a peer-reviewed study concludes.

Driving the news: The paper in PLOS One examines Exxon, Shell, Chevron and BP in 2009-2020 on the basis of three broad categories.

They are the use of climate and clean energy-related language in annual reports; pledges and actions in their business strategies; and investments in clean energy versus oil and gas.

What they found: The majors' climate discussion has outpaced spending growth to develop and deploy low-carbon energy.

The companies have yet to meaningfully start moving business practices away from fossil development, and clean energy remains a very small percentage of capital spending, it concludes.

"[T]he transition to clean energy business models is not occurring...Until actions and investment behavior are brought into alignment with discourse, accusations of greenwashing appear well-founded," it states.

Why it matters: Oil majors are increasingly diversifying into clean energy even as fossil fuels remain by far their dominant business lines. But critics call the efforts too slow.

The other side: Companies highlighted plans unveiled at the tail end of the study period or after. 

"Because this paper looks back historically over the period 2009-2020, we don’t believe it will take these developments and our progress fully into account," BP said.

BP, which has increasingly moved into renewables, EV charging and other areas, said low-carbon investments were 12% of its capital spending in 2021 and will reach 40% by 2025. It also plans to reduce oil-and-gas production by 40% by 2030.

Exxon cited its 2021 pledge to invest $15 billion on low-carbon development through 2027 focused on carbon capture, hydrogen and biofuels.

Study: Oil giants' green rhetoric outweighs action

The oil majors' climate discussion has outpaced spending growth to develop and deploy low-carbon energy.

An illustration of a hundred dollar bill covered in oil

Big Oil

Crude oil prices have eased off fresh seven-year highs reached earlier Monday morning, but it could be another wild week.

What we're watching: Supply and demand data, negotiations with Iran, and the state of Russia's potential invasion of Ukraine. 

The International Energy Agency's monthly outlook arrives Friday. OPEC's latest monthly report comes Thursday, while the U.S. Energy Information Administration's monthly pulse-taking comes tomorrow.

Meanwhile, traders will also be watching for signs of revival of a nuclear agreement with Iran in multilateral talks in Vienna this week.

What they're saying: Via S&P Global Platts...

"The negotiations have been the top oil supply risk for 2022, with an interim deal potentially increasing exports by 700,000 b/d while a breakdown in talks could spike geopolitical tensions and global oil prices, according to S&P Global Platts Analytics."

Why it matters: Oil's upward march has political ramifications for the White House and Democrats' fortunes in the midterm elections.

U.S. gasoline prices, which move largely in tandem with crude, are also at seven-year highs.

Where it stands: The global benchmark Brent crude is trading in the high-$92 per barrel range.

Oil markets await data and Iran talks amid price surge

Price of oil

An illustration showing a bouncing oil barrel.

President Biden will warn CEOs of the nation's largest oil companies on Wednesday that he's considering invoking emergency powers to boost U.S. refinery output, according to a letter obtained by Axios.

Why it matters: Biden's direct engagement with the oil giants is part of an ongoing White House effort to tame fuel prices despite limited options — and cast oil companies as responsible for consumers' higher bills.

The letter, which calls on the companies to boost output, signals how gasoline and diesel prices have become both an economic and political shock reaching the highest levels of the administration.

What he's saying: Biden tells seven big refiners and fuel companies that he's "prepared to use all reasonable and appropriate Federal Government tools and emergency authorities to increase refinery capacity and output in the near term."

"I understand that many factors contributed to the business decisions to reduce refinery capacity, which occurred before I took office," he writes. "But at a time of war, refinery profit margins well above normal being passed directly onto American families are not acceptable."

Adding an olive branch, the letter — sent to the heads of ExxonMobil, Chevron, BP America, Shell USA, Phillips 66, Marathon and Valero — calls for them to offer "concrete, near-term solutions."

Biden says he wants ideas to address inventory, price and refinery capacity issues in the coming months, as well as transportation measures to bring fuel to market.

"The crunch that families are facing deserves immediate action," Biden writes.

Between the lines: In seeking help from the oil industry, Biden is walking a political tightrope, eager to lower the cost at the pump without alienating his base, which backs policies to combat climate change.

Zoom out: Average U.S. gasoline prices have risen above $5 per gallon — fueling wider inflation, hitting consumers and creating political peril for Democrats ahead of the midterm elections.

"With prices for your product where they are today, you have ample market incentive to take these actions, and I recognize that some of you have already begun to do so," he writes in calling for increased supplies of gasoline, diesel and other refined products.

What's next: Biden said Energy Secretary Jennifer Granholm will convene an "emergency meeting on this topic."

The big picture: Very high oil prices thanks in part to Russia's unprovoked war on Ukraine, global fuel demand bouncing back from COVID-19 and constrained refinery capacity are pushing gas prices up.

Biden's letter focuses on the drop in U.S. refinery capacity in recent years. It has dropped by about 1 million barrels per day compared to pre-COVID levels, according to the industry and federal data.

The other side: Before seeing the letter, industry officials said they hope to work with the Biden administration and that discussions are already occurring.

"We're encouraged by the administration reaching out and asking refiners what they can do to help resolve the situation from a policy standpoint," Frank Macchiarola, a senior vice president at the American Petroleum Institute, told reporters on a call Tuesday.

Oil and gas producers have criticized the administration for not issuing new drilling leases on public lands, canceling the Keystone Pipeline and emphasizing its net zero carbon emissions climate agenda.

Biden warns Big Oil over gas output

The direct outreach to oil giants signals how gasoline and diesel prices have become both an economic and political shock.

Gas prices

The Biden White House increasingly views rising gasoline prices as a source of potential political peril — and is now asking some of the world's biggest oil producers to pump more oil.

Why it matters: This trend, combined with a fragile economic recovery threatened by the Delta variant of the coronavirus, and inflation beginning to bite consumers, could threaten the administration's ambitious congressional agenda for late summer and early fall.

Driving the news: The administration made two revealing moves on gas prices Tuesday morning.

Biden White House jammed on gas prices

A request for more oil production came just two days after the UN's alarming climate report.

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